'In the previous year there were 239,000 [overseas students coming to the UK], but in the latest figures this had fallen to 197,000: a drop of 42,000.' Photograph: Carl Court/AFP/Getty Images

The latest migration figures released today herald another drop in the net numbers coming to this country – down from 247,000 to 163,000. It sounds like good news: effectively managed migration based on secure borders is in the interests of all concerned, migrant and UK citizen alike.

But in the rush to applaud any cut in numbers, we run the risk of ignoring some very real economic consequences. Half of today's fall in migration came from the plummeting numbers of international students coming to Britain to study. In the previous year there were 239,000, but in the latest figures this had fallen to 197,000: a drop of 42,000. These students contribute a massive amount to the British economy through tuition fees and their day-to-day spending in this country. Indirectly, their spending – which is often concentrated in specific areas around their educational institution – generates local multipliers as businesses are able to use the money to expand their operations and employ more staff. At a time when Britain faces ever greater economic challenges, spending by international students has rarely been as important.

In the past, it has been difficult to quantify the financial impact of the fall in international student numbers in the net migration figures. This is because these figures do not break down the type of institution that international students attend, which is a major determinant in the level of spending by the student. However, an analysis by the Migration Matters Trust using further information released today by the Home Office on the types of visas issued to non-EU nationals gives an estimate of the financial cost of the drop in international students.

The Home Office information tells us that the reduction in numbers is not focused on universities, rather it's students going to other higher education institutions, further education colleges or independent schools. Scaremongering by groups such as Migration Watch tends to ascribe any fall in numbers to these types of non-university colleges as bogus students being kept out. This is dangerously wrong.

In 2010, the UK Border Agency estimated that the average proportion of students in non-university institutions who subsequently overstayed their visa was 14%. This was before recent government measures to improve the integrity of the system and at the time was flagged as the maximum possible estimate. On this highly conservative basis, we can adjust today's drop in international students for students who might have been bogus. Based on the UKBA figure, 86% – or 36,000 – would have been genuine.

A recent report by the Department for Business, Innovation & Skills estimated there were roughly four international students in further education colleges for every one in an independent school, and that the annual spend on tuition and living expenses per student was £13,040 in further education colleges and £22,240 in schools. Assuming it is principally further education colleges and independent schools that will have been hit by today's fall in international students, we can apply the figures from the BIS report to calculate the cost to the UK economy: £368m for further education and £175m for schools – a total of £543m.

In one sense, what matters here are less the specific statistics (the government's own net migration numbers are estimates subject to a confidence interval) and more the order of scale. Based on our Migration Matters Trust analysis, we know that, even adjusting for potential bogus students, the loss to the British economy from falling numbers of international students ran to several hundred million pounds in the last year.

When making choices about the right level of migration, we need to fully understand the costs as well as the benefits. At a time when the need for economic growth is at a premium, this understanding of the economic consequences of concentrating cuts on certain types of migration is too often missing.